Core Viewpoint - The automotive industry is experiencing a backlash against touchscreen-dominated interfaces, with a growing demand for physical controls due to safety concerns and customer dissatisfaction [3][5]. Group 1: Industry Trends - The shift to touchscreens was primarily driven by financial motivations, reducing manufacturing complexity and enabling software-based monetization [2]. - Studies indicate that touchscreen interactions can slow driver reaction times more than alcohol or cannabis impairment, raising significant safety concerns [3]. - The Euro NCAP will mandate physical controls for key functions by 2026 to achieve top safety ratings, accelerating the trend back to physical controls in Europe [5]. Group 2: Company Responses - Asian companies like BYD, Denza, and Xiaomi are leading the movement to restore physical controls in vehicles, with models featuring tactile buttons [4]. - Subaru is also reintroducing buttons in its upcoming models, such as the 2026 Outback, reflecting the industry's shift back to basics [4]. - BYD has surpassed Tesla in European sales, a trend that may continue with new model launches and decreasing demand for Tesla vehicles [5].

Core Insights - The launch of Xiaomi's YU7 electric SUV, which received nearly 300,000 orders within an hour, poses a significant competitive threat to Tesla in China and globally [1][2][3] - Xiaomi's strategy involves creating a fully integrated digital ecosystem, leveraging its existing 600 million smart devices to enhance customer loyalty [4][5] - Tesla is experiencing declining sales, with an 18% year-over-year drop in battery electric vehicle sales in China from January to May 2025, while BYD has overtaken Tesla in both sales and global revenue [9][10] Company Analysis - Xiaomi's YU7 is priced at approximately $35,000, directly competing with Tesla's Model Y, which starts at $36,760 [1][2] - Xiaomi's CEO Lei Jun emphasized the company's determination to compete with Tesla, indicating a shift in the competitive landscape [2] - Analysts suggest that Xiaomi's approach of treating vehicles as digital terminals within a broader network could resonate well in China's digital economy [4] Industry Trends - Tesla's sales in China have been declining, with BYD selling 894,000 EVs globally compared to Tesla's 603,000 during the same period [9] - The competitive pressure is compounded by Tesla's aging vehicle lineup, particularly the Model Y, which may require an update to maintain its market position [10] - Internal challenges at Tesla are evident, with key executives leaving the company amid increasing competition [11][12] Market Dynamics - Xiaomi's stock has surged by 72% this year, driven by its success in the EV market and expansion into other sectors [12] - Despite the challenges, analysts believe there is still room for Tesla to maintain its market presence due to its established reputation and innovation in the EV sector [13] - The lack of localized integration in Tesla's offerings may hinder its competitiveness in the Chinese market, where consumer preferences are rapidly evolving [14]

Core Insights - Xiaomi is launching a new electric SUV, the YU7, aimed at competing directly with Tesla's Model Y, priced at 253,500 yuan ($35,322), which is 10,000 yuan cheaper than Tesla's offering [1] - A Citi report had anticipated the YU7's price to be between 250,000 yuan and 320,000 yuan ($34,800 to $44,590), with expected monthly sales of around 30,000 units and annual sales projections of 300,000 to 360,000 units [2] - The YU7 is claimed to outperform Tesla's Model Y in several metrics, although it falls short in driver assistance features [3] Pricing and Market Position - The starting price of the YU7 is set at 253,500 yuan ($35,322), making it a competitive alternative to Tesla's Model Y priced at 263,500 yuan [1] - The pricing strategy aligns with Xiaomi's previous model, the SU7 sedan, which was also priced lower than Tesla's Model 3 [2] Sales Projections - Citi forecasts monthly sales of approximately 30,000 units for the YU7, with potential annual sales ranging from 300,000 to 360,000 units once sales momentum builds [2] Product Features - The YU7 includes driver-assist software, with the most advanced version utilizing Nvidia's Thor chip, although it is noted to be lacking in some driver assistance capabilities compared to Tesla [3] - Pre-sales for the YU7 commenced shortly after the announcement, with expected delivery timelines of one to five weeks [3]

Market Trends & Competition - Tesla's stock closed up 1.17% at $329.13, while Nasdaq rose 1.38%, Dow Jones 0.76%, and S&P 0.94% [1] - Tesla's Model Y and 3 lead global BEV sales from January to April with 259,000 and 143,000 units respectively, but Chinese brands are gaining traction [1] - Xiaomi SU7's sales are close to Model 3's in the first four months, with a difference of less than 40,000 units [1] - Tesla's vehicles are priced around $40,000, while Chinese competitors like BYD Seagull start at $9,700 and Wuling Mini at $4,300 [1] Production & New Models - Tesla is expected to start producing a cheaper model, potentially named Model Q, by the end of June 2025, targeting a price below $30,000 after the $7,500 US federal tax credit [1] - The new model will utilize parts of the next-generation platform and existing platforms, aiming for cost control and increased production without building new production lines [1] - The cheaper Tesla model may be a simplified version of Model 3 or Y, potentially reducing costs by removing features like heated seats [1] - Six-seater Model Y, with a longer wheelbase, is expected to begin production at the Shanghai factory in the second half of 2025 and may feature independent second-row seats [2] Autonomous Driving & Technology - Bloomberg estimates Tesla's Robotaxi hardware costs around $400, significantly lower than Waymo's $100,000 sensor suite [1] - Tesla is projected to have 35,000 Robotaxis on the road by 2026, compared to Waymo's 2,000, providing 250 million rides annually [1] - Tesla's accident rate is 0.15 per million miles, significantly lower than Waymo's 1.16 and the US average of 3.90 [1] - Tesla has collected 3 billion miles of driving data, vastly more than Waymo's 22 million [1] - Tesla's navigation system will offer suggestions to drivers to slow down in certain areas to save energy, potentially saving X% of energy based on data from other drivers [2] - Tesla's 2025.20% software update includes more code related to Grok, adding various personality modes to the in-car AI [2] Regulatory & Operational Challenges - Stockholm's transportation department rejected Tesla's request to test FSD technology due to administrative and risk considerations [2] - Tesla has been in conflict with Swedish unions since the end of 2023, causing service delays and hindering the establishment of supercharging stations [2]

Core Insights - Xiaomi has become the world's third-largest phone maker and is now entering the electric vehicle market, launching the YU7 crossover, which is seen as a potential competitor to Tesla's Model Y [1] - The YU7 is anticipated to significantly impact Model Y sales in China, with comparisons drawn to luxury brands like Ferrari [2] - Xiaomi's previous vehicle, the SU7, has been compared to the Porsche Taycan and has shown strong performance on the Nurburgring racetrack [3] Market Challenges - Xiaomi faces challenges following a fatal crash involving its vehicle, leading to increased scrutiny from the Chinese government on self-driving vehicle marketing and testing [3] - Analysts emphasize the importance of monitoring Xiaomi's sales over the next year to assess the impact of safety perceptions on consumer confidence [4] - The competitive landscape in China's EV market is described as brutal, necessitating Xiaomi to expand its product portfolio and seek international growth to avoid intense domestic competition [5]

Investment Rating - The report assigns a "Buy" rating for Xiaomi Corp. (1810.HK) with a 12-month target price of HK$62.00, representing an upside potential of 21.6% from the current price of HK$51.00 [1]. Core Insights - Strong sales in the AIoT segment are expected to drive higher profits in 1Q25, with significant growth in various product categories [1][2]. - The upcoming strategic product launch event is anticipated to unveil key innovations, including the XRING O1 chip and new premium smartphone models, which could enhance Xiaomi's competitive position [2][3]. - The report highlights Xiaomi's structural market share gains in China, particularly against competitors like Apple and Honor, despite a less optimistic overseas shipment outlook [3]. Financial Performance - Revenue forecasts for 2025-2027 remain largely unchanged, while adjusted net profit forecasts have been raised by 3-6% due to stronger IoT sales and gross profit outlook [17]. - For 1Q25, revenue is projected to grow by 45% year-on-year to RMB 109.5 billion, with adjusted net profit expected to increase by 70% year-on-year to RMB 9.4 billion [17]. Market Position and Growth - In the AIoT segment, Xiaomi's domestic sales of air conditioners, washing machines, and refrigerators saw year-on-year growth of 103%, 184%, and 145%, respectively, in 1Q25 [16]. - Xiaomi's tablet shipments grew by 57% year-on-year in 1Q25, achieving a No.3 market share globally and in China [16]. - The report anticipates that sales from large appliances and tablets will contribute approximately 40% of AIoT sales by 2027, up from around 30% in 2024 [16][37]. Valuation and Price Target - The 12-month SOTP-based target price for Xiaomi has been adjusted to HK$62, based on a 23x 2026E EV/NOPAT for Xiaomi core and a DCF-based valuation for Xiaomi EV at US$74 billion [18]. - The report indicates multiple share price catalysts in the coming months, including the strategic product launch event and 1Q25 results [19].

Investment Rating - The investment rating for BYD is "Buy" with a target price of HK$688, implying a 32x/22x 2025E/26E PER [15] - The investment rating for CATL is "Buy" with a target price of Rmb362/share, implying a 24.5x 25E P/E and 19.4x 26E P/E [19] Core Insights - In March 2025, China EV battery installation reached 61.4 GWh, marking a 54% month-over-month and 56% year-over-year increase, with total installations for 1Q25 at 148.9 GWh, also up 54% YoY [1][2] - CATL's market share remained stable at 43% in 1Q25, while BYD's market share increased by 2 percentage points to 29% [2] - Lithium Iron Phosphate (LFP) batteries continued to dominate the market with a 79% share in 1Q25, up 17 percentage points from 62% in 1Q24 [2][5] Summary by Sections Market Dynamics - CATL is shifting towards the low-end market due to the rise of A-class passenger vehicles, which accounted for approximately 41% of battery installations in 1Q25, up from 25% in 2024 [8] - The combined market share of A-class and B-class vehicles rose to 66% in 1Q25, compared to 61% in 2024 [8] Company Performance - Xiaomi's battery demand surged to 6.67 GWh in 1Q25, with the SU7 model contributing over 2 GWh monthly since its launch in March 2024, while Huawei's battery installation volume fell by about 40% YoY to 2.2 GWh [12] - CATL's product mix saw A-class and B-class vehicles account for 50% of its offerings in 1Q25, compared to 29% in 1Q24 [8] Valuation Metrics - BYD's target price is derived using a PEG ratio of 1.0x based on a projected 32% NP CAGR from 2025 to 2027 [15][17] - CATL's valuation is based on a 15.0x 2025E EV/EBITDA, reflecting its historical average minus 0.25 standard deviation since listing [19]

Investment Rating - The investment rating for Xiaomi is "Buy" with a target price of HK$73.50, implying an expected share price return of 47.1% [3][24]. Core Insights - Xiaomi's SU7 April delivery exceeded 28,000 units, slightly lower than March's 29,000+ due to fewer working days in April. Year-to-date EV delivery is estimated to exceed 104,000 units, representing 30% of its 2025 target of 350,000 units [1]. - The company plans to increase its store count from 269 to 298 by adding 29 stores and expanding into 8 new cities in April 2025 [1]. - The upcoming catalysts include the 1Q25 results, 2Q25 guidance, Mi 15S, AI smart glasses, and YU7 launch [1]. Financial Valuation - Xiaomi shares are valued at HK$73.50 using a sum-of-the-parts (SOTP) valuation based on 2026 estimates, with a P/E multiple of 27.1x for core businesses and 1.5x for smart EV sales, reflecting a strong growth outlook [12]. - The target price corresponds to a 30x adjusted EPS for 2026 [12]. Market Context - Xiaomi's market capitalization is approximately HK$1,296,059 million (US$167,113 million) [3]. - The report indicates a solid long-term visibility for Xiaomi's business segments, including smartphones, IoT, and internet services [12].

Investment Rating - The investment ratings for the companies mentioned in the report are as follows: AAC Technologies Holdings (1), BYD (1), NavInfo (3), Thunder Software Technology (3), TSMC (1), Xiaomi (1) [9] Core Insights - The Shanghai Auto Show highlighted the ongoing developments in the automotive technology sector, with key players like AAC, Xiaomi, ThunderSoft, and NavInfo showcasing their latest innovations and strategies [1] - AAC is expanding its automotive product offerings, including a new motor system, and has received projects from both domestic and international customers [2] - Xiaomi's YU7 launch is scheduled for June/July, with a significant backlog of over 200,000 SU7 orders, indicating strong demand [3] - ThunderSoft is focusing on its Cockpit+AI solution, which is expected to drive growth amid increasing competition from consumer electronics ODMs [5] - NavInfo is transforming into a tier-1 solution provider, with significant R&D investments aimed at enhancing its smart driving and smart cockpit capabilities [6] Summary by Company AAC Technologies - AAC showcased its automotive products for the first time, including acoustic, haptic, optics, and MEMS inertial sensors, and has secured projects from NEV customers [2] - The company is diversifying its business from smartphones to enhance growth potential in the automotive sector [2] Xiaomi - Xiaomi's presence at the auto show was less prominent compared to previous years, but the YU7 launch remains on track, with a substantial order backlog for the SU7 model [3] - The upcoming earnings report in Q1 2025 and new product launches could serve as catalysts for the company's stock [3] ThunderSoft - ThunderSoft introduced its AquaDriveOS and Cockpit+AI solutions, which are expected to meet the growing demand for smart vehicle technologies [5] - The company anticipates a pickup in smart drive demand in Q1 2025, despite intensifying competition [5] NavInfo - NavInfo aims to position itself as a new tier-1 provider with capabilities in both hardware and software, supported by a strong AI infrastructure [6] - The company has secured significant projects for its basic driving and smart cockpit solutions, indicating robust demand for its offerings [6] Industry Trends - Supply chain concerns are affecting the adoption of AD/ADAS technologies, but the long-term trend remains positive [1] - The localization of automotive chips in China is progressing, with NEV makers moving towards higher computing power requirements for future smart driving needs [8] - Recent regulations from MIIT are impacting the promotion of autonomous driving technologies, leading to a shift in focus towards ADAS solutions [7]

Core Viewpoint - The Chinese new energy vehicle market is experiencing a significant shift in 2025, with pure electric vehicles regaining market share while range-extended electric vehicles show signs of fatigue [2][4][7]. Summary by Sections Market Performance - In 2024, range-extended and plug-in hybrid vehicles were the main growth drivers in the Chinese new energy vehicle market, with wholesale sales of plug-in hybrids reaching 3.91 million units, a year-on-year increase of 84.8%, and range-extended vehicles at 1.179 million units, up 70.9% [2][3]. - Pure electric vehicle wholesale sales in 2024 totaled 7.095 million units, with a year-on-year growth rate of only 15.9%, leading to a market share drop to 58% [3]. 2025 Trends - In early 2025, the market structure began to shift significantly, with pure electric vehicle sales showing a notable recovery. January, February, and March saw year-on-year growth rates of 23.3%, 69.6%, and 35.2%, respectively [4]. - Conversely, range-extended vehicle growth slowed, with January showing a decline of 11.3%, and February and March growth rates of 7.4% and 26.0%, respectively [4]. - The share of pure electric vehicles in March 2025 rose to 62.8%, surpassing the 60% mark again [4]. Retail Market Insights - In the first quarter of 2025, pure electric vehicle retail sales grew by 45.2%, leading among all new energy vehicle types, while plug-in hybrids grew by 33.7%, and range-extended vehicles saw minimal growth of only 0.7% [4]. Market Structure Characteristics - The recovery of the pure electric market exhibits a "barbell" structure, driven by both low-end entry-level and high-end segments. The A00 class (micro) electric vehicles saw a remarkable year-on-year growth of 87% in March, increasing their share to 19% [5]. - New energy vehicle brands, particularly in the high-end segment, contributed significantly to growth, with new force brands capturing a market share of 17.1%, up 3 percentage points year-on-year [5]. Competitive Landscape - Despite lower absolute sales in the high-end segment compared to entry-level markets, the growth trend and brand image enhancement are significant. The average promotional discount for luxury electric vehicles reached 26.1% by March [6]. - The range-extended segment faces challenges, exemplified by the significant decline in sales for key players like Seres, which saw a 42.47% drop in the first quarter [6]. - The overall high growth in the new energy market in early 2025 is attributed to a shift in policy timing, with the stimulus window expected to be from February to December, contrasting with the previous year's concentrated efforts in the latter half [6].